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Morel v. State Farm Insurance Co.

November 16, 2007

BIENVENIDO MOREL, PLAINTIFF-APPELLANT,
v.
STATE FARM INSURANCE COMPANY, DEFENDANT-RESPONDENT.



On appeal from the Superior Court of New Jersey, Law Division, Passaic County, L-2726-06.

The opinion of the court was delivered by: Coburn, P.J.A.D.

NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION

APPROVED FOR PUBLICATION

Argued November 7, 2007

Before Judges Coburn, Grall and Chambers.

On May 11, 2005, plaintiff filed a demand for arbitration of his claim for $2,100 in personal injury protection benefits ("PIP"). The question to be resolved by the arbitrator was whether plaintiff was in his car at the time of the accident. The arbitrator rejected plaintiff's claim, ruling in favor of his insurer, defendant State Farm Insurance Company.

Plaintiff challenged the arbitrator's ruling in the Law Division pursuant to The New Jersey Alternative Procedure for Dispute Resolution Act, N.J.S.A. 2A:23A-1 to -30 ("APDRA"). He argued that the arbitrator made two legal errors. The first was applying collateral estoppel to bar his claim based on an earlier decision by another arbitrator who considered and rejected a claim by one of plaintiff's medical providers. The second was failing to require State Farm to bear the burden of proof on its contention that plaintiff's claim was fraudulent. In addition, plaintiff argued that the arbitrator's decision was not supported by substantial evidence.

At the hearing on plaintiff's application to vacate the award, the Law Division judge indicated that he would reserve judgment and "take a further look . . . at the arguments." He then said that his review was limited to considering whether the arbitration was marred by "fraud, corruption, conflict of interest, et cetera. . . ." Since plaintiff had made no such allegations, the judge concluded by indicating that the arbitration would be confirmed unless "[he] came up with . . . something else," in which case he would so indicate in a subsequent ruling. Thereafter, without expressing any further opinions on the matter, the judge filed an order confirming the arbitration. Plaintiff appeals, and we reverse.

The relevant subsections of the APDRA governing challenges to an arbitration award by a party who participated in the arbitration proceedings appear in N.J.S.A. 2A:23A-13, and provide as follows:

b. In considering an application for vacation, modification or correction, a decision of the umpire on the facts shall be final if there is substantial evidence to support that decision; provided, however, that when the application to the court is to vacate the award pursuant to paragraph (1), (2), (3), or (4) of subsection c., the court shall make an independent determination of any facts relevant thereto de novo, upon such record as may exist or as it may determine in a summary expedited proceeding as provided for by rules adopted by the Supreme Court for the purpose of acting on such applications.

c. The award shall be vacated on the application of a party who either participated in the alternative resolution proceeding or was served with a notice of intention to have alternative resolution if the court finds that the rights of that party were prejudiced by:

(1) Corruption, fraud or misconduct in procuring the award;

(2) Partiality of an umpire appointed as a neutral;

(3) In making the award, the umpire's exceeding their power or so imperfectly executing that power that a final ...


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